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HomeMy WebLinkAboutMinutes - City Council - 2005-06-21 - Special Meeting 146 City Council, Special Meeting City Council Chambers 777 Cypress Avenue, Redding, California June 21,2005,9:30 a.m. The meeting was called to order by Mayor Mathena with the following Council Members present: Dickerson, Murray, Pohlmeyer and Stegall. Also present were City Manager Warren, Assistant City Manager Perry, Assistant City Manager Starman, Deputy City Manager Bachman, City Attorney Duvernay, Electric Utility Director F eider, Police ChiefMoty, Development Services DirectorHamilton, Fire Chief Fry Community Services Director Niemer, Support Services Director Kersten, Personnel Director Johnson, City Treasurer Clark, Finance Officer Strong, Information Technology Manager Zempel, City Clerk Strohmayer and Assistant City Clerk Sherman. I . RESOLUTION - Adopting the City of Redding Biennial Budget for Fiscal Years 2005-2007 (B-130-070) Mayor Mathena applauded staffs dedication to the budget process and preparation of a balanced budget for fiscal years ending June 30, 2006 and 2007. He commented that this biennial budget proved to be especially challenging given the fact that the City is anticipating $3 million in take aways from the state. City Manager Warren explained that the biennial budget approach produces a more comprehensive and efficient method for administering the City's finances over a two-year period. The ultimate goal is to consistently produce a balanced budget while maintaining services in accordance with City Council's direction. Mr. Warren reported that Redding's budget for 2005-06 amounts to $237.8 million and $242.2 million for 2006-07. He said that the philosophy behind the budget is what it accomplishes and how it prepares the City for the future. Mr. Warren defined the four tenets of the budget: 1) It is Revenue Driven - The biennial budget allows the City Council, staff and the public to look at a conservatively projected revenue stream for the next two years. 2) Balance Between the Departments - An important component of the budget is to ensure that all departments do well and that funding and expenditures are spread evenly across the board; some departments should not suffer while others prosper. 3) A Balance Between Capital Projects, Personnel and Materials and Supplies - Historically, the City has balanced these major expenditures groups well, and 4) Fitting the Budget within the Ten-Year Plan - Very few cities approach the budget process in this manner, but it has proven to be very successful for Redding. I Mr. Warren referenced the Mayor's earlier comment with regard to the challenges facing the City's budget process this year, and while the state will be taking approximately $3 million from the General Fund over the next two years, the good news is that Measure lA, a constitutional amendment prohibiting the state from raiding local coffers to balance its budget, was successful and will take effect in 2006. He pointed to the ever-increasing costs associated with CalPERS as another challenge recalling that, two years ago, CalPERS advised cities that they were super funded and no premiums would be required for the next ten years. However, City staff was skeptical and continued to budget for CalPERS without change. Mr. Warren said that when the stock market took a significant downturn, many cities were in dire financial straits, but prudent budgeting allowed Redding to fare better than most. While significant insurance increases continue to be problematic within the budget process amounting to $1.2 million in 2005-06 and $600,000 in 2006-07, he pointed out that it is anticipated that both CalPERS and insurance rates will stabilize in the near future. I Mr. Warren said that in order to address these challenges which heavily impacted the General Fund, 22 positions are being left unfilled for the next two years, General Fund transfers to rolling stock were reduced by 10% or $100,000 and the Personnel Department will be bringing Workers Compensation claims in house for a significant savings. However, he related that while great strides have been made, there is still a back log of street repairs due to insufficient funding, only about one-half of the funding needed for public art is available, and no money is available for construction of a new public safety building or for purchasing open space and other properties. The Storm Drain Utility does not have sufficient funding and has the added burden of complying with strict state regulations, and while parking funds are also in the "red," that issue may be solved by potential parking improvements in the Downtown Area. 6/21/2005 147 I Mr. Warren pointed out that the Budget Committee zeroed in on the skyrocketing fees charged to the City for credit card purchases and recommended eliminating their use for payment of Permit Center fees (which tend to be significant) in order to save the City approximately $40,000. He added that staff and the Committee recommend reducing the 86% to 89% cost recovery subsidy for planning and engineering fees associated with development permits by increasing fees to attain a 25% cost recovery the first year and 30% the second year. This will allow Redding to come closer to the 45% state average. The proposed Aquatic Center entry fee increase of$l for adults and .50 cents for children will be put in place to provide "scholarship" funding for low-income individuals to access recreation facilities and programs, and Airport parking will increase from $5.50 to $6.50 per day. Mr. Warren said that the budget provides the highest level of service possible given limited resources and provides increased funding levels for certain items identified by the City Council such as projects included in the Capital Improvement Plan, one-time severance packages and Vacation Buy-Backs, $130,000 for operation of the Sundial Bridge, a $250,000 commitment to the new Library (this is in addition to the City's current commitment), and another $400,000 in capital construction costs for the Library due to inflation. Mr. Warren added that the McConnell Foundation has pledged to fund an amount equal to City and County contributions to the Library. The City will be upgrading its 800 megahertz radio system within this budget, $350,000 has been budgeted for Turtle Bay, the Airports fund is now in the "black" and doing well, funds have been budgeted to conduct a community survey relative to a sales tax increase, and neighborhood revitalization projects continue to work well and have a dramatic impact on reducing crime rates. Mr. Warren reported that the City's debt is less than 7% - very low when compared to most cities which have a 10% or greater debt ratio. I City Manager Warren related that three new positions were added to the Engineering Division due to the number of capital projects which must be completed, and 2.48 new positions were added in the Electric Department to maintain service at a high level. He also pointed out that the Risk Management Division will add one position to administer the Worker's Compensation claims which are being brought in house as mentioned earlier. Mr. Warren commented that the City's budget is leaner and does not include funding for "extras"without sacrificing something else. Mr. Warren predicted, however, that within the next six months, staff would be able to come back to Council with the good news that the City is in better financial shape that anticipated and there will be an opportunity to do a few other things at that time. He reaffirmed that the biggest capital project is the Stillwater Business Park and it is moving along well. Mr. Warren recognized all the department heads and their staff for meeting the challenges and bringing in a very lean budget and he acknowledged the Finance Division for its dedication and commitment to the process. City Manager Warren introduced the Citizen's Budget Committee Members, Dennis Haws, Ross Domke and Ginny Mistal explaining that these individuals were selected and invited to sit in on the budget process, make suggestions and recommendations and to witness, first hand, how the City develops its budget. He applauded their hard work and focus toward a balanced budget. I Citizen's Budget Committee Members' Comments Citizen's Budget Committee Member Ginny Mistal thanked the City Council for the opportunity to again serve on the Committee commenting that the experience validated for her the decisions made by the Budget Committee two years ago. Ms. Mistal supported the biennial budget approach pointing out that many other cities are following Redding's lead by developing two-year budgets. She emphasized that the Committee and staff scrutinized each line item looking for reductions that would help address the $3 million that will be taken by the state. She observed that current staffing shortages cannot be sustained long term and expressed concern regarding escalating insurance and retirement benefits noting that while staff has earned these benefits, it may be necessary to require employees to share the cost. Ms. Mistal believed that transient occupancy tax (TOT) and sales tax should be increased and that the Redding Municipal Airport must provide services commensurate with other cities through gradual increases. She supported a continued Council presence at the budget meetings and urged adoption of the budget as submitted. 6/21/2005 148 Committee Member Dennis Haws also appreciated the opportunity to serve on the Budget Committee and noted that not all cities invite public participation. The Committee looked at many ways to reduce costs and believed that every line item should be available for cuts. He observed that employee wages and benefits comprise 80% of most departmental budgets and asked department heads for reductions in this area. He further noted that insurance and retirement benefits are escalating to the point that many cities can no longer afford to fund these. He was impressed with the process and believed that long-term planning is a benefit to the City and he urged Council's support of the budget. Committee Member Russ Domke applauded the budget process as open and honest and said that it had been a rewarding experience. He pointed out that the City must take a hard look at health insurance benefits and consider mandating shared premiums with employees. He also believed that the Vacation Buy Back program should be eliminated noting that employees often earn vacation at an hourly wage rate significantly lower than when those hours are redeemed, proving very costly for the City. Mr. Domke also believed that Turtle Bay, while a wonderful community amenity, should follow suit by cutting its budget. He asserted that the budget is fair and equitable and he encouraged City Council support. I Budget Assumptions Deputy City Manager Bachman provided and overview of the budget assumptions relating that the City maintains conservative assumption estimates, not only to produce a balanced budget, but to ensure that the budget fits within the Ten-Year Financial Plan, and that reserves do not drop below 5%. Mr. Bachman said that Sales Tax Revenue and Transient Occupancy Tax (TOT) is expected to increase by 4.0%, while a 4.5% increase in Property Tax is anticipated. Motor vehicle in-lieu revenue is projected to increase 6.0% and revenue from licenses and permits, fines and penalties should increase by 4%. Mr. Bachman emphasized that conservative revenue projections are typically below actual revenues. In response to Council Member Murray, Deputy City Manager Bachman responded that staff looks at recent history, which reveals fairly good revenue growth, in developing assumptions. Council Member Murray also questioned the 5% reserve minimum opining that this number artificially inhibits the City's spending ability for much-needed services such as public safety. He also questioned the 4.5% property tax increase projection maintaining that actual increases amount to 2% per year. Mr. Murray acknowledged the rationale of conservative projections but contended that 5% is an arbitrary number and departmental budgets must be based on real numbers. I Deputy City Manager Bachman acknowledged that as budget years progress, staff can make changes to the budget as Council directs. Council Member Pohlmeyer said the budget assumptions appear sound and pointed out that Council retains the ability to make changes to the budget when required. He cautioned against changing the budget assumptions at this stage in the process because it would nullify the entire proposed budget document. Council Member Dickerson commented that he has served on several agencies that did not set reserve limits and, as a result, were not able to develop balanced budgets. Mr. Dickerson believed that this system works well because it is understood that the reserve cannot fall below a given number in order to plan for the unforseen. Furthermore, while a 5% reserve is probably too low, he said it can be changed if future revenue warrants. Council Member Murray said that while he did not disagree, he pointed out that the labor unions know that these are artificial numbers and that can be problematic during negotiations, given the Budget Committee's recommendation to look at benefit cost sharing for employees. He questioned a better time than now to review and modify the assumptions and the reserve level. I Council Member Pohlmeyer said that it is the prerogative of the Mayor or any Council Member to decide that the assumptions are inadequate and place the item on the City Council agenda for further discussion. He said that it was his understanding that in the absence of that discussion, the assumptions are acceptable. Mr. Pohlmeyer suggested that changing the assumptions at this point in the process is simply too late for this budget cycle. 6/21/2005 149 Administrative' Services Department Deputy City Manager Bachman related that there are no budget issues for the Finance Division although it is down by 1 % positions. He acknowledged Council's concern with regard to the Airports Division's ability to pay down its debt to the General Fund and he commented that staff is working diligently on long-term debt reduction. To that eIld, he said that approximately $3.1 million will be repaid to the General Fund leaving a balance of$2.1 million which should be retired by 2009. As earlier mentioned, Mr. Bachman said parking rates at Redding Municipal Airport will be increased to a level consistent with airports of this size, but he cautioned that increases should occur gradually so that ridership is not lost to Sacramento. I Community Services Department Community Services Director Niemer related that the Department includes the Recreation Division, the Museum and the Park- In- Lieu and Park Development Divisions. She indicated that the Departmental budget is status quo with the exception of having to increase the Aquatic Center entry fees to address budget shortfalls. She indicated that because firm commitments on expected grant money did not materialize, an additional $5,000 is needed to provide recreation scholarships to low-income individuals at last year's levels. Ms. Niemer said, however, that staffwill continue to work diligently to obtain maximum grant funding to ensure facility and program affordability. Council Member Stegall questioned the increased entry fees at the Aquatic Center and asked if that would address the scholarship issue. She emphasized the importance of maintaining recreational facilities and programs at an affordable level for the low-income and suggested that the City Manager could find the $5,000 in the budget. Community Services Director Niemer responded that the increase will address most recreational scholarships and added that the Department is very close to meeting its needs. I In response to Council Member Murray, Ms Niemer explained that there is no single recreation program which could stand to lose $5,000 to satisfy the shortfall, and cutting smaller amounts from several programs would be ill advised, as well. Ms. Niemer was confident that the funds could be raised by other means. City Manger Warren indicated that if Council is so inclined, an additional $5,000 could be added to the budget for scholarships. Development Services Department Development Services Director Hamilton said the departmental budget totals approximately $7 million and remains status quo with 8% to 10% cuts across the board. He related that two newly-created positions in the Engineering Division will be funded by Development Impact and Utility Rate fees and have no impact to the General Fund. With regard to cost recovery for planning and engineering fees, Mr. Hamilton acknowledged that these amounts have ebbed and flowed over the years, and are currently at approximately 14% of costs. Staff would like to increase cost recovery to 25% the first year and 30% the second year in order to come closer to the state average of approximately 45%. City Manager Warren intetjected that the budget is predicated on a significant increase in these fees beginning October 1,2005, and once ~he proposed fee structUre is finalized, staff will return to City Council for consideration. I Council Member Murray expressed frustration with a $2.8 million per year subsidy in development fee~ while puplic ~afety response times for the Police and Fire Departments continue to increase due to lack of sufficient personnel. He also pointed to recommendations of the Zucker Rep~rt which have yet to be implemented su~h as a computer tracking system. Mr. Murray suggested that the difference between a 45% cost recovery benchmark and Redding's 70% level could fund the Department's unmet need and put more police officers on the street. City Manager Warren explained that after taking all issues into consideration, there simply was not enough funding in this b~dget to accomplish everything. Electric Utility Department Electric Utility Director Feider said that this budget will serve the community well over the next two years. He reported that the Department is six months into a new operating 6/21/2005 150 paradigm wherein Redding Electric Utility (REU) will dramatically reduce reliance on power from the Western Area Power Authority (WAPA) in favor of environmentally-friendly "Green Power" such as solar and wind. REU also continues to rely on natural gas-fired generating capacity at the Redding Power Plant which is fast becoming expert in gas storage techniques to minimize costs and maximize revenue for wholesale. He related that the budget drivers are threefold: 1) the price of natural gas, 2) the weather, and 3) personnel costs. Mr. F eider noted that personnel costs are up this year by approximately $3 million due to PERS, PARS and insurance cost increases, bringing the total budget amount to $112.6 million for 2005-06 and $105.9 million for 2006-07. REU provides long-term resource planning and secures contacts to supply needed power over and above what REU can provide. In response to Council Member Murray, Mr. Feider said there is about 350 megawatts of power available to serve the City with a 15% reserve. I Fire Department Fire Chief Fry said that the Department has no issues, and the total budget comprises $13,954,830 for 2005-06 and $145,518,150 for 2006-07. He said that the Department's biggest project is the opening of Fire Station 8 later this year which will be staffed by existing fire personnel from Airport Fire Station No.7. In response to Council Member Murray's question as to the number of plan checks and inspections being performed by Fire Department personnel, Chief Fry stated that the Department's full time inspector handles the plan checks while the engine companies go out each day to perform onsite inspections. Mr. Fry indicated that this was the most efficient and practical use of personnel because it allows the engine companies to become familiar with building layouts should they have to respond in a fire. General City Government Assistant City Manager Bachman explained that General City Government is comprised of the City Council, City Manager, City Attorney, City Clerk and City Treasurer Departments and those budgets are status quo for the most part. He pointed out, however, that the City Manager's and City Attorney's Offices combined are down 1.5 positions (an Economic Development Director and a shared clerical position), but noted that once the Stillwater Business Park gets underway, it will be necessary to return to City Council with a marketing plan which may include a request to fill the Economic Development Director position. I Non Departmental Deputy City Manager Bachman explained that the non-departmental budget covers issues/items which are not the sole responsibility of anyone department or division. He provided an overview of the community events supported by the City such as Marketfest, the Banner Program, Ducky Derby, the Community Christmas Tree and Parade, Kool April Nites, 3 on 3 Basketball, etc. Funding for these events totals $183,100 for 2005-06 and $160,600 for 2006-07. Mr. Bachman added that $600,000 was added to cover one-time retirement costs and an additional $200,000 in capital costs for the new Library. The City also provides direct support to community projects such as the Shasta County Arts Council, Diestelhorst Office Park, Superior California Development, Turtle Bay, etc. and these projects total $1,859.260 for 2005-06 and $1,161,140 for 2006-07. Turtle Bay Exploration Park (C-070-250-250) With regard to Turtle Bay support, Council Member Murray inquired about the funding source. Mr. Bachman responded that $350,000 has been included in the 2005-06 budget to assist Turtle Bay, and while no funding is included in the 2006-07 budget, $350,000 has been earmarked in the City's Ten-Year Financial Plan which can be added to the 2006-07 budget at Council's direction. He stated that if the intent of the City Council is to continue funding Turtle Bay at previous levels ($400,000), $50,000 can be added to the 2006-07 budget to accomplish that end. There is an opportunity, however, to shift an additional $100,000 to Turtle Bay from other sources such as the Mosaiculture Project ($20,000), Special Projects ($20,000), Electric Utility Public Good funds ($35,000) and Water/Wastewater public education funds ($25,000). I Mr. Warren added that during recent meetings with Turtle Bay President John Peterson, Mr. Peterson pointed out that if the City continues its support of Turtle Bay, the McConnell Foundation has indicated that it will also contribute funding for operational costs. 6/2112005 151 Council Member Murray stated that he did not favor adding an additional $50,000 to the budget, but he supported shifting $100,000 from other areas as set forth above to Turtle Bay for a total amount of $450,000. Council Member Stegall questioned the expectations of Turtle Bay with regard to current and ongoing City funding. I John Peterson, President of the Turtle Bay Exploration Park (Park), said the Park is doing very well with increased memberships and patronage but is faced with additional expense and a significant increase in personnel costs due to maintenance needs for the newly- completed Arboretum and gardens. He urged the City Council to continue its financial support ofthe Park adding that the McConnell Foundation would be more inclined to provide funding at a level two to three times that of the City through a Foundation grant. MOTION: Made by Council Member Stegall, seconded by Council Member Pohlmeyer to maintain the City's level of financial commitment to Turtle Bay Exploration Park with $400,000 from the General Fund and an additional $100,000 to be shifted from other areas as defined above for a total of $500,000 for fiscal year 2005-06. The Vote: Unanimous Ayes. Municipal Utilities Department Assistant City Manager Perry said that the Municipal Utilities Department is comprised of five utility divisions, all of which are dealing with considerable growth and the challenge of serving approximately 3,000 new residents with aging infrastructure. I He related that the Solid Waste Division is in good shape with planned increases. Water and Wastewater Divisions are both on Master Plans and working smoothly. The Storm Drain Utility Division is short on funding but increasing fees would require a 2/3 majority vote from the public. He said that staff in the Streets Division is aggressively working on the significant backlog of street repairs to the extent possible, and the debt service was reduced by $800,000 by paying off some bonds. He pointed out that the biggest projects are augmenting the water supply and the expansion of the Clear Creek Wastewater Treatment Plant. Council Member Murray questioned how spending an additional $3.8 million over previous years in street repairs could be accomplished without adequate personnel resources. Assistant City Manager Perry responded that the smaller jobs and repairs would go to outsourcing contracts. Personnel Department Personnel Director Johnson advised that the Department has no budget issues but Worker's Compensation claims, formerly managed by CMI, Inc., will be brought in house for a significant savings. Even with increased personnel and equipment, it is anticipated that the City will save approximately $390,000 over the next five years and provide more efficient service to City employees. I In response to Council Member Murray, Ms. Johnson said that the City is effectively utilizing its volunteer corps and, while they continue to actively recruit more volunteers, most individuals are looking for gainful employment. With regard to employee morale, Ms. Johnson reported that Personnel receives more phone calls from employees feeling the effects of doing more with fewer resources, and from Department Directors who are cognizant that the work must get done. At this time, she said, there are unfortunately not enough employees to meet all the goals and this is an ongoing problem being experienced by every city in the state. Police Department Police Chief Moty said that his Department is the largest in the General Fund and that staff looked hard for areas to cut. He said that some projects will be placed on hold until budget times are better. However, he pointed out that insufficient personnel resources and the expanding population of the City, has increased response times for in-progress calls to approximately 14.5 minutes. Mr. Moty said that as the City continues to grow, it is imperative to plan and have sufficient resources on hand. 6/21/2005 152 Council Member Murray described the response time for in-progress calls as unacceptable and reiterated his dissatisfaction that the proposed budget does not provide funding to adequately staff public safety services. Support Services Department Support Services Director Kersten advised that the Department, which includes Information Technology, Reprographics, the Convention Center and Visitor's Bureau, Fleet Maintenance, Park and Facilities Maintenance and Purchasing has no budget issues. He said the Department is diversified and budget cuts have been made as required, however, the 800 mhz radio system must be replaced and the plan is to finance approximately $1.9 million of$2.7 million cost for the system. Funding Requests Received After Preparation of the Proposed Budget Deputy City Manager Bachman recalled that the City Council deferred the following funding requests to today's discussions: 1) financial assistance for the Shasta County Detox Center, and 2) a funding request from AmeriCorps Vista of America, coordinators ofthe "Bike the Sundial" event. Mr. Bachman advised that the Detox Center issue can again be deferred as the County works through problems surrounding this facility. However, AmeriCorp has requested approximately $3,000 in City assistance for this community event to be held on Sunday, July 16, 2005. I City Manager Warren said that because a representative from AmeriCorps Vista was unable to attend today' s meeting to provide more information regarding the event, he would contact the event coordinators and return to Council with additional information at a regular City Council Meeting. City Manager Warren recapped his understanding of City Council's direction as follows: 1) Add $5,000 to the Community Services Department budget to provide recreational scholarships for City programs and facilities to service the low-income, 2) consider higher fees and lower subsidies for planning and engineering permits to bring Redding's cost recovery closer to the state average of 45%, and 3) consider funding a project tracking system for the Development Services Division and additional police officers should future revenue allow. I MOTION: Made by Council Member Pohlmeyer, seconded by Council Member Stegall adopting Resolution No. 2005-77, a resolution of the City Council of the City of Redding adopting and approving the Biennial Budget for Fiscal Years ending June 30, 2006 and June 30,2007. The Vote: AYES: NOES: ABSTAIN: ABSENT: Council Members: Dickerson, Pohlmeyer, Stegall and Mathena Council Members: Murray Council Members: None Council Members: None Resolution No. 2005-77 is on file in the Office of the City Clerk. ADJOURNMENT There being no further business, at the hour of 12:35 p.m., Mayor Mathena declared the meeting adjourned. APPROVED I ATTEST: ~~Jl4 City Clerk . 6/21/2005